The $13.25 billion acquisition of Electronic Data Systems by Hewlett-Packard—the ninth largest tech deal ever, according to DealLogic—has moved the M&A league table standings, DealJournal Heidi Moore reports. Before the deal was announced, Goldman Sachs and Morgan Stanley led this year’s ranking from advising technology companies on mergers. But neither bank has a role in the H-P deal, pushing them down in the rankings
“Goldman ranked first with $14 billion of announced deals to its credit this year, and Morgan Stanley ranked second with $11 billion according to investment-banking research provider Dealogic,” Moore writes. “But now, Goldman is in third place, displaced by Lehman Brothers and J.P. Morgan. Lehman has jumped from fifth to first place with $17 billion of deals to its credit, while J.P. Morgan — which, just yesterday, languished in seventh place with only about $2.2 billion of tech deals to its credit — has vaulted to second place in the rankings from seventh place. Morgan Stanley has fallen to No. 5.”
Citigroup and Evercore Partners advised Electronic Data on the deal. J.P. Morgan Chase and Lehman Brothers advised Hewlett-Packard.
Hewlett-Packard: The Advisers [Deal Journal]

Hewlett-Packard: Spying, Spying and More Spying

hewlettpackardcorporatespyingpretexting.jpgHewlett-Packard wants to be the tech-company of the future and, unfortunately, that goal may be coming a reality in a way they never planned. Instead of becoming a shining star of new technologies, the company has been plagued by an association with a darker kind of future—a sort of Max Headroom, Robocop-style dystopian future where corporations employ spies to steal confidential, personal and corporate information about competitors, employees and reporters.
The pretexting scandal that led to the departure of the chairman of Hewlett Packard’s board of directors, resignations by senior executives, humiliating public hearings on Capitol Hill and a lawsuit brought by the state of California is by now well known. (A recap: H-P apparently engaged private detectives—to snoop into alleged leaks to the press that seemed to come from board members—who used false pretenses to obtain the phone records of board members and reporters, possibly breaking the law in the process.) This morning, however, Fortune writer Nicholas Varchaver, breaks the news that Hewlett-Packard’s spying may have started long before that famous episode. And, disturbingly, his reporting suggests that the pretexting that made headlines last year might not be the anomaly Hewlett-Packard chief executive Mark Hurd claimed it was.
[After the jump, the nasty lawsuit and the new claims of possible pretexting.)

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Who Put The Bee In Tom Perkins Bonnet?

tom_perkinsmemoir.jpgWhen we read the report in the San Jose Mercury News on Tuesday that venture capitalist and former Hewlett-Packard board member Tom Perkins was making pointed remarks about corporate governance—including some fierce jabs at former H-P board chair Pattie Dunn—we all thought: why bring this up now?
After all, Tom won this fight last year, right? Pattie lost her position at the head of the board table, then had to leave the board altogether. She became a “fallen” or “disgraced” “former corporate leader.” Her name became synonymous with corporate scandal, and especially pretexting. She was indicted by the California attorney general. She even got cancer. Isn’t it time to leave Pattie in peace? Even DealBreaker hadn’t picked on “Pattie Cakes” for months.
So why now? We thought maybe it was the book. Tom’s got his memoirs coming out soon. Maybe he wants the publicity. It sounds a bit cheap to drag a sick, unemployed and indicted woman’s shame back before the public just to sell a few more copies of a book. Especially when you are already rich enough to afford a $100 million yacht. Does Tom Perkins really need to worry about whether his book sells?
Today the Wall Street Journal‘s editorial page runs the full text of the speech that was reported earlier in the Mercury News. And there’s one line that might shed some light on why Tom is dragging out the whole H-P thing again instead of sailing around the South Pacific.

And so, when the “wet kiss” Cnet.com article about how great Mark Hurd was at strategy appeared, Ms. Fiorina and I agree that Ms. Dunn launched the now infamous “Kona” spying investigation aimed at ridding the board of those directors (the tech committee) most familiar with strategy, whom Pattie assumed were the “evil” leakers. All this is documented in a characteristically long-winded New Yorker article of Feb. 19.

That’s right! It was the New Yorker! And it’s long-windedness!
Of course, we have no idea what Tom’s talking about because, let’s face it, it was the New Yorker. That’s the magazine that’s read by people who want to appear brainy but don’t really want to be bothered with doing stuff like learning very much. But we’ll check it out and report back.
See how far we’ll go for you? We’ll even read the New Yorker!

The ‘Compliance’ Board
[Wall Street Journal]

PattieDunn3.jpgHey, remember yesterday when we did a couple of posts that weren’t about Tuesday’s market plunge? Remember the one about the remarks about corporate governance by venture capitalist and former Hewlett-Packard board member Tom Perkins? No? You don’t read our posts about corporate governance because (as one reader told us yesterday) “corporate governance is so f—ing boring?”
Well, it’s not quite as boring anymore. Perkins drew a distinction between compliance oriented corporate boards and business guidance oriented boards. Seems like a useful distinction, right? Well, apparently it didn’t go over well with the lawyer for former Hewlett-Packard chairwoman Pattie Dunn. So the Dunnsters are fighting back. And this time it’s personal.
From the San Jose Mercury News:

“Tom Perkins attacked my client. He did so unfairly. He did so falsely when he knows she cannot answer him,” he said in a statement e-mailed to the news media. Dunn can’t respond directly to Perkins’ accusations because of the legal case pending against her. The case erupted after Perkins quit over the way Dunn, then-HP chair, conducted an investigation into boardroom leaks to journalists.
“He’s rewriting the history of what happened,” Brosnahan told the Mercury News. “Normally, I wouldn’t say anything, but when he attacks my client personally, we’re not going to sit here and let him get away with it. It’s just awful what he did.”

Tom Perkins apparently didn’t respond to this. So just imagine him chuckling as he sails his $100 million yacht into the horizon.
[No clue why Pattie’s getting her, uhm, lawyers all in a twist about this? Well, to put it mildly, Pattie and Perkins have a bit of a history together. Feel free to check out our H-P Archives for all the gruesome details.]
Dunn’s lawyer blasts Perkins [Mercury News]

The Costs of Compliance: Too Few Geeks

tom_perkinsmemoir.jpgWe’ve noted before that the faddish devotion to compliance-oriented corporate governance—encouraged by everything and everyone from Sarbanes-Oxley, it’s attendant regulatory schema, some of the more opinionated-parts of the business press and the reigning corporate governance gurus—has serious costs that are all too often ignored. The whole corporate-spying pretexting scandal at Hewlett-Packard was probably the public example of this.
Now Tom Perkins, a veteran from the HP wars, has made his first public remarks since the scandal and directed them at exactly this problem. According to Perkins, too many corporate board members are so obsessed with compliance that they don’t know much about the company on whose board they are serving. He draws a useful distinction between two-types of directors–the guidance geeks who understand the business and the compliance nerds who understand legal rules and regulations.
The San Jose Mercury News reports:

During his 35-minute talk, Perkins outlined two kinds of board members, placing himself in the category of an old-style venture capital-type who is extremely involved in the business. He called that type a “guidance director.”
In contrast is the new emerging director, whom he called the “compliance director.” He described that person as someone increasingly focused on Sarbanes-Oxley requirements, who jumps from company board to company board, dispensing and heeding advice from consultants and lawyers.
Perkins, 75, derided the latter, which he called a “plug-to-plug compatible director” who believes he or she is equally capable of serving on a bank board as on that of a technology behemoth such as HP.

And Perkins thinks things are only getting worse. The compliance nerds are beating out the guidance geeks.

But today, he said, with too few “geeks” on its board, HP has evolved fully into a compliance board, “possibly untroubled by worries about technology and marketing strategy.”
“I think the guidance board will vanish and it will be replaced by compliance boards who just listen to lawyers and consultants,” he said, referring to the general corporate trend.

Ex-HP director laments corporate board trend [Mercury News]

Those who were planning to bet big money online in regards to the outcome of the Super Bowl were served a sizeable setback over the weekend. But, assuming they also earmarked some clams for more “legal” pursuits, and play the bullish side of the market, there shouldn’t be too much to shed tears over.* According to the Super Bowl Stock Indicator, when an old NFL team wins, the Dow Jones average goes up.

The indicator has been correct following 31 of the 40 Super Bowls, wrong five times and was inconclusive four times (but more on that later). Even counting the inconclusive readings, that’s about a 78 percent success rate. Dropping the inconclusive years from the equation results lifts the success rate near 89 percent.
The Bears facing the Colts marks the seventh time that two old NFL teams have faced off in the big game. The six previous times that’s happened, the Dow has gone up every time, posting an average gain of 18 percent.

And if doesn’t go up, consider one point scored for Super-Bowl-Day-Spousal-Abuse. Either way, you’ve got a winner.
NFL’s biggest winner: Bulls, not bears [CNN Money]
*Not that you guys would ever “shed tears,” but, you know, whatever the testosterone-driven equivalent of letting salty discharge come out of your eyes is.

Larry Sonsini Ousted As H-P Board’s Ouside Counsel

The pretexting scandal claims another victim, Silicon Valley super lawyer Larry Sonsini. This won’t come as a surprise to anyone who watch Sonsini at the Congressional hearings earlier this year, where he came off as at least a bit evasive. Particularly frustrating was the fact that he seemed to be giving board members advice based on the legal work of Hewlett-Packard’s general counsel. Kind of makes you wonder what part of outside counsel Sonsini didn’t understand.

After the resignation, Mr. Sonsini, in his role as outside counsel, immediately interviewed Mr. Perkins. But he did not find that Mr. Perkins had resigned because of a disagreement with the company, which would have prompted the board to disclose the circumstances to the Securities and Exchange Commission. That has prompted an S.E.C. investigation.
Mr. Perkins also alerted the board to the use of pretexting, calling it illegal. In a response, Mr. Sonsini told him that the pretexting was “within legal limits,” though that opinion turned out to be based on the advice of the H. P. lawyer, now facing charges, who in turn had received the opinion from a Boston lawyer sharing an office with one of H. P.’s private investigators.
The Sonsini firm in late August interviewed people involved in the spying, as well as Mark V. Hurd, the company chairman and chief executive, and concluded again that nothing illegal had occurred. In early September, the company filed a statement to the S.E.C. disclosing the pretexting and stating that it was “not generally unlawful.”
A Congressional subcommittee asked Mr. Sonsini to testify during its investigation of the spying. He was called to testify alongside Ms. Dunn and had to sit in the witness seat for more than five hours, though she got the brunt of the queries. He defended his law firm’s work during the hearing and said that he considered pretexting to be unethical and improper.

H.P. Board Cuts Its Ties With Lawyer

Tom Perkins Memoir: “Valley Boy”

tom_perkinsmemoir.jpgTom Perkins, the former Hewlett-Packard board member who helped expose the spying scandal that rocked the company and unseated its chairman earlier this year, has agreed to write a memoir that will provide details of the H-P affair.
From Keith Kelly’s column in the Post:

The memoir is entitled “Valley Boy: The Education of Tom Perkins,” and will appear under the Gotham imprint.
It begins with his stormy resignation from H-P in May 2006, shortly after the board learned that then-Chairman Patricia Dunn had conducted a lengthy spying operation on the company’s own board members to learn who was leaking stories to the press.
Perkins, a board member at Post parent company News Corp., went to authorities after he discovered that he had also been the subject of unauthorized surveillance by Dunn, which triggered the scandal that forced her to step down.

H-P Insider Scores A Tech-Tell Memoir [New York Post]